International Association of
Maritime Economists (IAME)
2010 Conference, Lisbon,
Portugal
The Corporate Geography of
Global Terminal Operators
Paper no. 2.03.01
Theo Notteboom
ITMMA - University of Antwerp and Antwerp
Maritime Academy, Belgium
Jean-Paul Rodrigue
Department of Global Studies & Geography,
Hofstra University, New York, USA
The Corporate Geography of Global Terminal
Operators
1) An Overview of Global Terminal Operators
2) Typology and Market Strategies
3) Consolidation and Scale Increase
4) The Spatial Expansion of Terminal Operators
5) How “Global” are Global Terminal Operators?
6) Vertical Integration Strategies in the Hinterland
Container yard, Port of Yantian (HPH), China
Changing Role and Function of Transport Terminals
Conventional
Small terminal surface
Container
Large terminal surface
Direct transshipment possible
Indirect transshipment (modal
separation in time and space)
Advanced mechanization and
automation
Organization and planning
Limited mechanization and automation
Improvisation in terminal operations
Top 12 Global Port Operators in Equity-Based
Throughput, 2007
Dragados
SSA Marine
APL
HHLA
MSC
Eurogate
Evergreen
COSCO
DPW
APM Terminals
Hutchison Port Holdings
PSA
0
10
20
30
Million TEUs
40
50
Container Terminal Surface of the World's Major Port
Holdings, 2009
N = 405
Number of Terminals and Total Hectares Controlled
by the Ten Largest Port Holdings, 2009
Terminals
0
10
HAN
20
30
40
12
ERG
60
Total Hectares
10
SIPG
50
Number of Terminals
7
COS
14
SSA
16
PAM
16
APM
43
DPW
51
PSA
36
HPH
47
0
500
1 000
1 500
2 000
Hectares
2 500
3 000
3 500
4 000
Depth and Surface Characteristics
160
100%
100
90%
90
80%
80
80%
70%
70
70%
60%
60
60%
50%
50
50%
40%
40
40%
30%
30
30%
20%
20
20%
10%
10
10%
0%
0
0%
Frequency
Cumulative %
140
100%
Frequency
Cumulative %
90%
120
80
60
120
110
100
90
80
70
60
Hectares
More than…
Depth Range (Meters)
50
Less 8 to 10 10 to 12 to 14 to 16 to 18 to
than 8
12
14
16
18
20
40
NA
30
0
20
20
10
40
NA
Frequency
100
Typology of Global Port Operators
Stevedores
Maritime Shipping
Companies
Financial Holdings
Horizontal integration
Vertical integration
Portfolio diversification
Port operations is the core
business; Investment in
container terminals for
expansion and
diversification.
Maritime shipping is the
main business; Investment
in container terminals as a
support function.
Financial assets management
is the main business;
Investment in container
terminals for valuation and
revenue generation.
Expansion through direct
investment.
Expansion through direct
investment or through
parent companies.
Expansion through
acquisitions, mergers and
reorganization of assets.
PSA (Public), HHLA (Public),
Eurogate (Private), HPH
(Private), ICTSI (Private),
SSA (Private).
COSCO (Public), MSC
(Private), APL (Private),
Hanjin (Private), Evergreen
(Private).
DPW (Sovereign Wealth
Fund), Ports America (AIG;
Fund), RREEF (Deutsche
Bank; Fund), Macquarie
Infrastructure (Fund), Morgan
Stanley Infrastructure (Fund).
APM T (Private)
Factors behind the Interest of Equity Firms in
Transport Terminals
Asset (Intrinsic
value)
Globalization made terminal assets more valuable.
Terminals occupy premium locations (waterfront) that cannot be
substituted.
Traffic growth linked with valuation.
Same amount of land generates a higher income.
Terminals as fairly liquid assets.
Source of income
(Operational
value)
Income (rent) linked with traffic volume.
Constant revenue stream with limited, or predictable, seasonality.
Traffic growth expectations result in income growth expectations.
Diversification
(Risk mitigation
value)
Sectorial and geographical asset diversification.
Terminals at different locations help mitigate risks linked with a
specific regional or national market.
Consolidation and Scale Increases: Major Port
Terminal Acquisitions since 2005
Date
Transaction
2005
DP World takes over CSX World
Terminals
Early 2006 PSA acquires a 20% stake in HPH
Mid 2006
DP World acquires P&O Ports
Mid 2006
Goldman Sachs Consortium acquires
ABP
End 2006 AIG acquires P&O Ports North America
Early 2007 Ontario Teachers’ Pension Fund
acquires OOIL Terminals
Mid 2007
RREEF acquires Maher Terminals
Price compared to
EBITDA
14 times
17 times
19 times
14.5 times
24 times
23.5 times
25 times
EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization
The Strategies of Port Operators
Financial Assets
Large financial assets and the capacity to tap global financial
markets. Terminals as equity generating returns.
Managerial Expertise
Experience in the management of containerized operations.
IT and compliance with a variety of procedures.
Gateway Access
Establishing hinterland access.
Creation of a “stronghold”.
Provides a stable flow of containerized shipments.
Development of related inland logistics activities.
Leverage
Negotiate with maritime shippers and inland freight transport
companies favorable conditions.
Some are subsidiaries of maritime shipping companies.
Traffic Capture
Capture and maintain traffic for their terminals.
Global Perspective
Comprehensive view of the state of the industry.
Anticipate developments and opportunities.
Inter-firm Relationships in the Three Main Container
Ports of the Rhine-Scheldt Delta, 2010
HUTCHISON PORT
HOLDINGS
Majority
shareholding
100%
Minority
Shareholding
ECT
MSC
100%
50%
Delta Terminal
Waal- and
Eemhaven
Euromax
phase 1
Rotterdam World Gateway
(Maasvlakte 2)
Operational by 2013
50%
50%
60%
30%
APM Terminal Maasvlakte
ROTTERDAM
PSA
(Antwerp/
Zeebrugge)
CYKH
Alliance
10%
Terminal 1
(Maasvlakte 2)
Operational by 2014
ANTWERP
50%
NYK
100%
Partnerships of multiple stakeholders
PSA
20%
100%
100%
New World
Alliance
100%
DP World
ZIM Line
42.5%
10%
MSC Home terminal
50%
North Sea Terminal
100%
Europe Terminal
50%
Deurganck Terminal
Antwerp International
Terminal (AIT)
DP World Delwaidedock
Shipping Line
(Global) Terminal
Operator
Antwerp Gateway
Terminal
Cosco Pacific
20%
CMA-CGM
10%
35%
65%
CHZ
APM Terminals
(AP Moller Group)
100%
Albert II-dock north (under
construction)
Shanghai
International Port
Group (SIPG)
25%
PORT
Financial Holding
75%
APM Terminal
ZEEBRUGGE
Inter-firm Relationships in the Three Main Container
Ports of North America, 2010
Japanese, Taiwanese & Korean
(Export-oriented strategy)
“Financialized” Stevedores
APL
100%
Global Gateway South
Ontario Teachers'
Pension Plan
NYK
100%
Yusen Terminals
100%
100%
TraPac Los Angeles Berth
136
Mitsui OSK
100%
APM Terminals Pier 400
Evergreen
50%
Evergreen Terminal
50%
Yangming
40%
West Basin Container
Terminal
60%
100%
100%
Deutsche Bank
RREEF
LONG BEACH
Global Terminal and
Container Services
APM Terminals Port
Elizabeth
Terminal C60
100%
Maher Terminals
100%
Maher Terminal
Ports America
100%
Port Newark Container
Terminal
MSC
50%
Terminal A
OOIL
100%
Long Beach Container
Terminal
K-Lines
100%
Pier G Berth
50%
100%
100%
California United Terminals
Cosco Pacific
51%
Pacific Container Terminal
49%
Hanjin
60%
Total Terminals International
40%
Shipping Line
APM Terminals
(AP Moller Group)
New York Container Terminal
LOS ANGELES
Hyundai
Global Container
Terminals
Terminal Operator
Stevedoring
Services of
America
NEW YORK
AIG Highstar
Capital
Macquarie
Infrastructure
Terminal
PORT
Financial Holding
Inter-firm Relationships in the Main Container Ports
of the Pearl River Delta, 2010
Joint Ventures (TO / Local Government)
GUANGZHOU
APM Terminals
(AP Moller Group)
20%
China Shipping
Group
40%
50%
ZHUHAI
Zhuhai International
Container Terminals
Guangzhou South China
Oceangate Container
Terminal
Nansha Container Terminal
Guangzhou Huangpu Xinsha
Terminal
25%
HUTCHISON PORT
HOLDINGS
70%
Da Chan Bay Terminal One
35%
Shekou Container Terminals
80%
Chiwan Container Terminal
75%
49%
PSA
10%
Moderns Terminals
COSCO-HIT Terminal
10%
Hong Kong International
Terminals
20%
100%
Shenzhen Municipal
Government
China Merchants
Holdings International
67%
Asia Port Services
DP World
66%
DP World Hong Kong
55%
Asia Container Terminals
HONG KONG
SHENZHEN
Shipping Line
Guangzhou Port
Group
33%
Yantian International
Container Terminals
20%
49%
Dongguan Container
Terminal
30%
Modern
Terminals
60%
50%
Shenzhen Yantian
Port Group
65%
41%
Cosco Pacific
Nanhai International
Container Terminals
Guangzhou Huangpu
Xingang Terminal
50%
39%
Terminal Operator
Terminal
PORT
Financial Holding
33%
Container Terminals of the World's Four Major Port
Holdings, 2009
Importance of ‘home port’ (2009)
PSA: Singapore = 44.2% of global non-equity based throughput.
DP World: Dubai = 25.3% of global non-equity based throughput.
HPH: Hong Kong = 16.5% of global non-equity based throughput.
Regional Share in the Terminal Portfolio of the Four
Main Global Terminal Operators (Hectares, 2009)
Africa
HPH
Australia
North America
PSA
South America /
Caribbean
Pacific Asia
DPW
South Asia / Middle East
Mediterranean
APM
Europe Atlantic
0%
20%
40%
60%
80%
100%
Container Terminals of the World's Regional Port
Holdings, 2009
Regional Share in the Terminal Portfolio of Some
Regional Terminal Operators (Hectares, 2009)
Africa
Cosco
Australia
PAM
North America
SSA
South America /
Caribbean
Pacific Asia
ICTSI
HAN
South Asia / Middle East
EVG
Mediterranean
ERG
Europe Atlantic
0%
20%
40%
60%
80%
100%
Vertical and Horizontal Integration in Port
Development
Horizontal
Integration
Vertical
Integration
Maritime Services
Inland
Port
Port
Intermediate hub
Port Holding
Maritime
Shipping
Port Terminal
Operations
Port Services
Inland Services
Terminal
Port
Rail / Barge
Distribution Center
Inland Modes
and Terminals
Commodity Chain
Distribution
Centers
World’s Main Intermediate Hubs, 2008
Liner Shipping Port Calls, 2009
18,6%
2,2%
62,0%
Direct
One Transshipment
Two Transshipments
Three Transshipments
17,2%
Conclusion
■ The “four sisters” (HPH, APM, PSA and DPW)
•
•
•
•
Analogies with the oil industry (oligopoly).
Strong multinational portfolio; each market is regional.
Standardization of management practices.
Multiplying effects to the functional and operational benefits
brought by containerization.
■ Two major and complementary roles
• Gateways:
• Linking global and regional freight distribution systems.
• Complex stake holding at the port and in the hinterland.
• Intermediary hubs:
• Connecting different systems of maritime circulation.
• Single GTOs played a preponderant role.
• Both account for terminal growth and profitability.
Conclusion
■ Vertical integration, horizontal integration and portfolio
diversification
• Maritime shipping companies:
• Secure traffic for their networks.
• Profitability of both seaside and landside operations.
• Stevedore companies:
• Expanded from their base port or region.
• Diversify and replicate their business model.
• Financial holdings:
• Valuation and revenue generation.
• Organic growth (new terminals) and M&A of existing facilities
(and operators):
• Common strategies.
• GTO differ little from their manufacturing and retail counterparts in
view of globalization.
Conclusion
■ Future expectations
• Part of business cycles.
• Diminishing returns.
• Fast growth, mergers and acquisitions:
• Underlines that the industry may be close to achieve a level of
maturity.
• Convergence towards a common business model?
• Shift in the corporate geography of GTOs:
• Then: Dynamics oriented towards expansion.
• Now: Rationalization, performance improvements and the search for
niche markets (segmentation).